SRB authorisation the main problem
Sale and Rent Back is targeted at those who are in financial difficulties who may be vulnerable to selling techniques which obscure the downsides. Banning cold-calling, leaflet dropping and the use of emotive phrases in promotional material will be crucial – along with tighter monitoring of the activities of these firms.
Adam Phillips, chairman of the Financial Services Consumer Panel said: “Sale and Rent Back can provide rich pickings for firms seeking to make money from people who are desperate. Firms have been able to lure vulnerable people into deals which they later regret when the rent rises or they lose their home: people see the promise of being able to stay in their own home and get cash up front quickly, without necessarily being warned of the longer-term consequences. FSA regulation of this area promises to provide better explanation and protection for consumers.
“However, the FSA must police this area thoroughly. We still have worries that firms will try to exploit consumers both within the rules, and by trying to operate outside the rules. The fact that only around 80 firms have applied for FSA authorisation, when the OFT had judged that there were over 1000 firms undertaking sale and rent back, means the FSA must watch the authorisation boundary carefully. The Consumer Panel has real concerns about this particular product and will continue to monitor the situation.”